What Do We Know about Capital Structure? Some Evidence from International Data

ABSTRACT

We investigate the determinants of capital structure choice by analyzing the financing decisions of public firms in the major
industrialized countries. At an aggregate level, firm leverage is fairly similar across the G‐7 countries. We find that factors
identified by previous studies as correlated in the cross‐section with firm leverage in the United States, are similarly correlated
in other countries as well. However, a deeper examination of the U.S. and foreign evidence suggests that the theoretical underpinnings
of the observed correlations are still largely unresolved.